'Customs Bill' debate shows scale of Brexit challenge facing the Government

17 MPs made speeches, and others contributed through interventions, to the debate on the ‘Ways and Means Resolution’ paving the way for the Taxation (Cross-border Trade) Bill (also known as the Customs Bill). The resolutions were approved, unamended.

The text of the resolutions appear at the bottom of this report.

The minister’s speech and interventions

Financial Secretary to the Treasury, Mel Stride, opened the debate. He stated that the motions were ‘another essential step’ in the Brexit process. “The Taxation (Cross-border Trade) Bill will pave the way for new domestic legislation that will enable the UK to establish a stand-alone customs regime. It will allow the UK to charge customs duty on goods, including those imported from the EU. It will allow the Government to set out how and in what form customs declarations should be made. It will also give the UK the freedom to vary rates of import duty as necessary, in particular in the case of trade remedies investigations and for developing countries.” The minister added that the Bill will also ‘modify elements of our VAT and excise legislation to ensure that it functions effectively upon our EU exit’. 

Labour MP Mike Gapes challenged the minister over what consideration he had given to ‘the complications that would be caused in the relationship between Northern Ireland and the Republic of Ireland’. The minister replied that “we are of the same mind as the European Union and the Irish Republic that there should be no return to the hard borders of the past. We are committed to as frictionless a solution as possible for the border between Northern Ireland and the Irish Republic.” Pressed by Lib Dem Tom Brake to give a written guarantee that there will be no controls on the border the minister repeated that ‘we have no intention of reverting to the hard borders of the past, and that we will ensure that we fully take into account the unique political and cultural circumstances of Northern Ireland and the Irish Republic.’

Labour MP Louise Ellman told the minister the UK Chamber of Shipping had spoken of an “absolute catastrophe” unless issues relating to transport through the ports are resolved. The minister acknowledged this was “an extremely important point, particularly in relation to roll-on/roll-off ports. I have been to Dover to meet the port’s chief executive and other staff, and Her Majesty’s Revenue and Customs is closely engaged through various roundtable exercises with all the UK’s ports. We recognise the paramount importance of ensuring that we have fluid trade flows through those ports.” Ellman also asked what financial provision is going to be made if Operation Stack has to be put into practice on the M20 every week, if not more regularly, when there is a blockage at the port. The minister replied that “Operation Stack arose not because of a general deficiency in the customs arrangements but because of the specifics of what occurred on the French side of the channel. If that situation occurred again, which I suppose it could do irrespective of the arrangements we have for customs, the Government would clearly make sure that we had sufficient resource to deal with that eventuality.” 

Tom Brake (Lib Dem) asked the minister what the chief executive of the Port of Dover had said about how much the extra average processing time per vehicle would need to be for the port to stop functioning. The minister acknowledged that the figure was very low. “I think it is a matter of a couple of minutes—if the whole system stopped for more than a couple of minutes we would start to see major problems, which is why we are placing such an extremely high priority on making sure that our ro-ro ports continue to move as effectively as they should.”

Folkestone MP Damian Collins (Conservative) highlighted that more than 80% of the UK’s freight movement goes through the channel tunnel and the port of Dover. “Anything that slows, let alone delays, that processing will cause massive backlogs, and the physical infrastructure is not yet in place to do this.” Dover MP Charlie Elphicke (Independent) stressed that it was ‘really important for the channel ports that parking facilities and resilience are built in off the M20 so that whatever eventuality arrives with respect to needing to do checks—whether for animal health or customs purposes—we have the right kind of infrastructure and facilities in place on day one’. The minister said that ‘we certainly recognise that we need to have infrastructure there and that the port itself would generally not be able to handle a large number of stoppages at any one time’. Collins also asked the minister to confirm that the £250 million allocated by the Government in the autumn statement two years ago for the provision of an Operation Stack relief lorry park on the M20 is still in place. The minister said he would write to Collins. 

West London MP Ruth Cadbury (Labour) was concerned about whether Heathrow would be ready. “Yes, absolutely,” was the minister’s reply. “In the case of Dover, most of the traffic is intra-EU trade, whereas a high proportion of the traffic going into Heathrow is more international than simply the EU, so there is already greater engagement with third-country trading. We are therefore confident that Heathrow will be ready.”

Stella Creasy (also Labour) was concerned about the 13th VAT directive which small business could be ‘saddled with’. The minister replied that “at the point at which we leave the European Union, we will gain further control over VAT, although that depends on the precise nature of the deal that is negotiated. It might be that we move from acquisition VAT to import VAT depending on where that negotiation lands, which remains to be seen. The general principle is that the Government are entirely committed to ensuring that burdens on businesses are kept to an absolute minimum and that trade flows are maintained.”

Stoke MP Gareth Snell (also Labour) raised concerns from the British Ceramic Confederation, which is based in his constituency. They are “genuinely concerned about the market and trade remedies that will exist post exit, particularly for dumped goods such as tiles and tableware, which could undermine the indigenous manufacturing base.’ Will he clarify what those remedies might look like once we leave the EU?” The minister responded that the bulk of the measures to which Snell referred would be be in the Taxation (Cross-border Trade) Bill, including trade remedy measures on dumping, excessive subsidy and safeguarding. “In the event that there is evidence of dumping or the other things to which I have referred, there will be a trade remedies authority, the details of which have already been disclosed to the House in the Trade Bill. That body and the Secretary of State for International Trade will be able to work together to ensure that, when there are problems due to activities such as dumping, we will be able to take appropriate action in the normal manner.”

Conservative MP John Howell was concerned that flexibility must be built into the measure so it allowed the VAT and customs system to continue, whatever the outcome of the negotiations. The minister acknowledged the point, saying “This is a framework Bill, so it will allow us to make sure that we can deliver wherever the negotiations land. It does not presuppose any particular outcome from the negotiations; its purpose is to enable the outcome of the negotiations to be put into effect.”

Another Conservative, Anna Soubry, made a similar point, but focusing on whether the measure would be able “to cope with all eventualities, including our staying de facto as a member of the customs union through a period of transition? Could we—if everything goes the way I would like—even stay a member of the customs union under this Bill, if that were the will of the Government and the House?” The minister said we would be leaving the customs union, but the bill ‘does indeed allow for a transition period in which there could be a very close customs association with the European Union.’

Stephen Doughty (Labour) was concerned about HMRC’s capacity to deal with various customs arrangements. A report from the Home Affairs Committee had said that the Home Office is providing only an extra 300 staff by 2019, ‘yet HMRC says that it needs 5,000 additional staff to cope with a changed customs regime’. The minister said the Government would be guided by HMRC on the number of staff required. “Jon Thompson, the head of HMRC, has suggested that between 3,000 and 5,000 staff will be needed in a day one contingency scenario, if that is where we end up, and he and HMRC are in discussions with us about both the timing of the pressing of the buttons on these issues and the costs involved. The hon. Gentleman can rest assured that HMRC will be provided with whatever resources it requires to ensure that we are ready on day one.”

Chris Leslie (Labour) raised arrangements for sanitary and phytosanitary regulatory checks at Dover and the channel tunnel entrance and exit. “They are not there at present and if we were going to institute customs checks, we would similarly have to institute those regulatory checks.” Andrew Murrison (Conservative) said it was wrong to say that phytosanitary checks do not happen—or could not happen—at the moment. “We experienced such checks clearly in 2001, at the time of the bovine spongiform encephalopathy outbreak. These things are very real and they happen from time to time. It is right that member states should be able to protect public health and animal health, and they are perfectly capable of doing so within the European Union.” The minister thanked his colleague for making the point effectively.

The minister stated that, to meet the Government’s two core objectives – “establishing an independent international trade policy, ensuring UK-EU trade that is as frictionless as possible and avoiding a hard border on the island of Ireland—the Government have set out two options for our future customs regime. One is a highly streamlined customs arrangement. That approach includes a number of measures to help minimise barriers to trade: negotiating continued access to some facilitations that our traders currently enjoy; introducing innovative new-technology-based solutions to reduce the risk of delays; and simplifying and streamlining the administrative demands on businesses. The other is a new customs partnership. It is an unprecedented and innovative approach under which the UK would mirror the EU’s requirements for imports from the rest of the world, removing a need for the formal customs border between the UK and the EU. Both of those options would take time to put in place. We are clear that “cliff-edge” changes are in no one’s interests. Businesses should have to adjust only once to a new customs relationship. It is for that reason that we are proposing an implementation period, during which businesses and Governments in both the UK and the European Union would have time to adapt.”

Labour speeches

Shadow Chief Secretary to the Treasury, Peter Dowd, led for Labour in the debate. “I exhort the Minister to have a look at the representations of the Chartered Institute of Taxation,” he said. “I am sure that he will read those observations will alacrity, as I do. In the institute’s response to the Government’s White Paper, “Customs Bill: legislating for the UK’s future customs, VAT and excise regimes”, it made a number of observations that are worth highlighting. For example, paragraph 1.3 states: “The paper gives rise to an unusually complex mix of legal and technical issues within equally complex political constraints. It is not our remit to enter into debate about the political constraints, but a lack of clarity around the political constraints makes the technical analysis somewhat more difficult.” That is a fair reflection, in very measured tones, of what the rest of us think, which is that the cack-handed manner in which the Government have approached the negotiations with the EU has left the important detail that is necessary to ensure the deal that the Prime Minister ostensibly wants—namely, streamlined customs arrangements—to the vacillations of the Government in general and the Brexit Secretary in particular. That is very worrying.”

Dowd continued, saying: “It is worrying in that the Government continue to be dragged screaming and shouting to this Chamber on any issue that they feel uncomfortable debating. When they do discuss it, they try to curtail the debate. The Chartered Institute of Taxation also has something to say on that in paragraphs 5.4 and 5.5 of its response to the White Paper, which state: “We acknowledge the predicament of needing to begin the legislative process before knowing the outcome of negotiations. However, we have concerns around the limited level of scrutiny that this law-making process allows, given the political uncertainty, the potential for large-scale changes and tight timescales… The Bill will, we understand, have the powers to amend primary legislation using secondary legislation; raising similar concerns around delegated powers as with the EU Withdrawal Bill.”

Dowd explained: “The Opposition recognise the need for the Government to begin preparations for an independent customs and tariff regime, as that is both logical and necessary. However, it does not mean giving the Government a blank cheque to concentrate power in the hands of the Executive.” He warned that, although Labour supports the creation of a trade remedies authority to help to protect UK industry and advise the Government on how best to tackle the dumping of state-subsidised cheap goods on the UK market, “we do not want to see an authority compiled of the International Trade Secretary’s cronies… Instead, we want a trade remedies authority that reports directly to Parliament… It should have representatives from the trade union movement, British business and each of the devolved Administrations.” 

Ian Murray, a Labour backbencher, proposed two amendments which, in effect, argued for remaining in the customs union. He set out three reasons for tabling the amendments. First, ‘if taking back control is truly what we wish to do… it should surely mean taking back control for this Parliament.’ Second, ”It is wrong for the Government to bring this motion on excluding tariffs with the European Union, because nobody has yet voted for us to leave the customs union. The customs union is vital to this country”. Third, ‘the Government are clearly preparing for no deal… which would be utterly disastrous for this country.’ Murray also explored the impact leaving the customs union would have on sectors including pharmaceuticals and shipping.

Chris Leslie backed his colleague Ian Murray’s amendments. “Let us bear in mind what this Ways and Means motion might presage for tariffs on our different imports and exports,” he said. “A 7% tariff would be introduced on ceramic products. On cars, the tariff would be 10%.” “There would be an 11% tariff on footwear, 20% on beverages, potentially 45% on cereals and 50% on meat products. Those are serious impediments to some major industries in the United Kingdom. We can prepare for a tariff regime, but as stated in the amendments tabled by [Murray], we do not wish to impose tariffs on goods traded with our nearest neighbours in the European Union. In essence, we want to replicate the customs union arrangement we currently have.” Leslie also raised rules of origin, ‘because it is not just a question of tariffs; it is about what proportion of these products originates from within the United Kingdom and what proportion relates to components or other parts that may have come from the inventory or warehouse of the whole European Union’.

Sarah Jones warned that ‘sweeping new and unscrutinised arrangements for customs duties are a threat to our domestic industries and have the potential to choke up our entire customs system’. A member of the Home Affairs Committee, she noted that the chief executive of HMRC ‘told us that the delivery of the customs declaration service was absolutely vital and that it would be “catastrophic” if the system was not operational on Brexit day.’

Stephen Doughty, another Home Affairs Committee member, identified ‘two fundamental issues: first, the practicalities and, secondly, the cost.’ He made particular reference to the aerospace industry. “Airbus has been very clear that its work involves 80,000 trips between the UK and EU countries a year, which relies on a seamless flow of goods and people, and that removing the seamless nature of that will be dangerous for its business and its prospects. Airbus and companies in its supply chain currently collect limited data for customs needs, but on the assumption that the UK becomes a third country, it would need to produce a customs declaration on wings and satellite components moving from the UK to the EU27. One early assumption is that this would require as many as 50 datasets for declarations, including for country of origin.” Some aerospace parts cross the channel five times as they move along the various assembly lines in factories in both the UK and continental Europe, he said.

Shadow Treasury Team member Anneliese Dodds wound up the debate for Labour. She stated that Labour’s policy was to leave all options open, including continuing customs union membership. She said it was ‘unfathomable to Opposition Members why the Government are refusing to rule in continuing customs union membership, even during a transition period, when that is what business has so clearly demanded.’ While she agreed with many of the sentiments underlying Ian Murray’s amendments she was concerned about how the amendments would interact with WTO rules. “The amendments would apply regardless of the future customs model. The scope is not restricted, as currently drafted.” She explained: “If we were to adopt amendments that allow the UK Government to set customs duties on imports and exports from every other country in the world but not our European neighbours, in the case of a chaotic no-deal situation we would be faced with two unpalatable options. First, we could disregard the most favoured nation rule, in which case we would be exposed to virtually limitless potential dispute challenges from all other WTO members. The second option is abiding by the most favoured nation rule, but that would mean having to trade with all other countries on the same basis as we traded with the EU—namely, as the amendments would have it, without tariffs or quotas.” 

Conservative backbench speeches

Marcus Fysh (Con) looked at data systems. “I have met industry representatives, and I have to thank my hon. Friend the Member for Dover (Charlie Elphicke) for organising some of those meetings in a very efficient fashion.” “We heard from one panel about a system called Intrastat, whereby economic flows around the European Union, based on actual transactions, are recorded. It was suggested that it is possible to, effectively, bolt the tracing of different liabilities on to that system, with the customs system operating in parallel with it.” “I implore Ministers to try to persuade the EU, even though so far it has been very reluctant, to allow member states’ national customs authorities to talk properly to us about what data interfaces are going to be required for what will probably be quite a lot of extra transactions and considerations that will have to be made. I certainly stand ready to help with my contacts, if I can, to enable some of those conversations to happen. Whether it is a ramped-up trade facilitation exercise—the “option 1” that the Minister described—or a partnership based on a new type of tracing of the way in which goods move around our economy and across our external borders and those of the EU, at the moment, we will need to make and record lots of declarations of one kind or another, and the other side will have to be confident that what we say is the status of these goods is in fact the case.”

Fysh argued that VAT processing “has been the Cinderella of this conversation over the past few months… The manner of the processing of VAT really makes a difference to very many businesses, and it is a major cash-flow issue for most businesses. If we want to stay open to ideas, as we do, with our EU friends and allies, and if we want to have good facilitation of cross-border trade, we need to address, for example, the ability of a vendor to attend a trade show and take a load of samples with them, because if there is a VAT issue, that could really be a problem. It is also a problem in the art world where very high-value objects are moving around.” With regard to the Irish border he wondered whether, in the VAT resolutions, “we are confining ourselves a little too much by saying that the Government may not, through the Bill, make any amendment relating to VAT rates, exemptions and zero rating. One of the issues with the Irish border historically, and where the real problems came from when Ireland was given its independence, was the amount of smuggling, and the rates and tariffs on goods going into the UK were a major factor in that. Perhaps we could look to smoothing the feelings and the actual processes on the Irish border to make sure that, as far as possible, our VAT rates are as harmonised as they could be so that there is no temptation to smuggle there.”

Ross Thomson argued that striking new trade deals ‘will unlock the potential of many more Scottish businesses, helping them to make their mark around the world and boosting our economy at home, too’. He noted that the UK ‘will be able to set preferential duties and additional duties—for example, to implement a preferential tariff applicable to developing countries.’ He accused the EU of having a ‘protectionist tariff structure’ which we would be free of after Brexit. 

Richard Graham described the Bill as ‘practical and necessary’. He warned: “It is absolutely vital that the EU does not overplay its strong hand at this delicate stage of negotiations, for if it decides that negotiations on citizens’ rights, Ireland and finance have made insufficient progress to allow us to move on to debating an implementation period, future trade and other partnerships, there is a real danger that the momentum will move behind those who believe not only that no deal is possible, but that it is likely or even desirable, and that we need to prepare for that situation above all else.”

In an intervention Kenneth Clarke observed that the Government’s policy “is that they are definitely not going to have a hard border and they are definitely leaving the customs union. That could be very good for the [Irish border] community… because smuggling was a very profitable source of income in the past for a large number of inhabitants on both sides of the Irish border. It seems to me that so long as the Government maintain their totally contradictory pose, smuggling will once more come back to the border in a big way.”

Former MEP Vicky Ford was glad that the UK is looking for bespoke solutions. “We should not just cut and paste the customs procedures that we use for products from far-flung parts of the globe on to our trade with Europe. Goods that travel long distances can have their customs paperwork cleared while they are on the sea or in the air, which would be much more challenging for our cross-channel activities, let alone those between Ireland and Northern Ireland.” She added: “We need a specific deal. We need a transitional period.”

Anna Soubry supported Ian Murray’s ‘excellent amendments’. “As this Brexit reality or nightmare begins to dawn increasingly on the people of this country, we see that this scenario of either deal or no deal is not the real option facing the British people. We are being painted the idea of the hard Brexit as something that we should prepare for, and although it is right of the Government to be responsible and examine that, the reality is that we are more likely than not to not get a deal.” “We need to stay in the customs union for the sake of our economy,” she concluded.

Other speeches

SNP Treasury spokesperson Kirsty Blackman felt the Government ‘have not been clear with businesses about even their aspirations for how customs will look.’ She noted that the Government’s white paper talks about contingency options for if the Government do not achieve their aspirational, bespoke deal. “In a contingency situation, there would not be a £15 VAT-free threshold on parcels posted to people by family members, businesses and organisations in the EU. The Ways and Means motions that we are supposed to be agreeing today would allow the Government to charge VAT on gifts sent to people from the EU, which is ridiculous. If somebody gets a parcel worth less than £15 from a person in America, no VAT is payable on it, but the Government propose that such an exemption would not apply to things that came from the EU in a contingency situation. A lot of people would be pretty unhappy to discover that they will have to pay a customs charge on presents or other items that have come from the EU.”

Regarding the customs declaration service Blackman noted the minister’s statement “that he hopes to have pilots soon, with the service up and running by January 2019, but three months is not enough to test a customs declaration service fully. It is not enough to allow businesses to iron out all the problems that might arise or to get used to the red tape.” She added: “The changes that the Government propose, particularly the customs duties that will be put on goods coming from the EU, or leaving the UK to go to the EU, are a disaster for businesses and for people at home. Some of those goods cross the border several times. For organisations such as car manufacturers or aerospace companies, sometimes the widgets—for want of a better word—cross from the UK to the EU and back many times before there is a finished product. If there has to be a customs declaration each time, and if there is an increase of even a few minutes in the time taken on each occasion, real problems will be caused to a huge number of businesses.”

Lib Dem Brexit spokesperson Tom Brake said he had visited Northern Ireland five weeks ago. “One of the communities I visited was Forkhill in South Armagh, which was very badly affected during the troubles… [T]he residents of Forkhill are worried that there will be no means to control safely the 275 border points between Ireland and Northern Ireland. If the proposal is that part of the solution will be to conduct ad hoc checks at separate border points, or at some distance from the border, those people are worried that the British customs officer, the British police officer, or perhaps the British soldier will become a target.”

Regarding the port of Dover, Brake observed “that it is not really a port. The port authorities clearly state that it is in fact a bridge… The only checks that the UK is carrying out on trucks coming into this country are related to smuggling, and they are done on the basis of intelligence, rather than, for example, on the basis of checking one truck in every 100. That is why the system flows smoothly.” He observed that ‘when the 17-mile tailback occurred two years ago, it was the result of just two French border officers not turning up for their shift’. “We have said a great deal about the need for the UK to be prepared in terms of our customs systems, of what we are going to do on the border and the approaches to the border… [But] unless [Calais and] everyone else is just as prepared as we are, we could still be in an almighty jam.” Brake analysed the Government’s two options of a ‘highly streamlined customs arrangement’ and ‘a new customs partnership’, concluding that, stripped of their rhetoric, what they really amounted to was, in the case of the first, a border between Ireland and Northern Ireland, and, in the case of the second, a ‘blue-sky solution that no one has thought of, has programmed for or has any hope of implementing any time soon’.

Independent Unionist Lady Hermon said she was “deeply disquieted by the fact that prominent Conservative Members are seemingly in favour of no deal as we leave the EU, because today’s Belfast Telegraph carries a report saying that republican organisations in Northern Ireland and Sinn Féin are hoping that there is a hard Brexit. They are exploiting that idea to then campaign for a border poll to try to rip Northern Ireland away from the rest of the UK. That is extremely concerning to me, as a Unionist.”

Jonathan Edwards of Plaid Cymru  said that he had asked the Secretary of State for International Trade “what would happen to all the trade deals that we already enjoy around the world. His view was that they were going to be renegotiated, seamlessly, but I fear that that showed extreme naivety on his part. Why would those countries agree to the same terms and conditions with a far smaller trading bloc, which is what the UK will be, as they agreed with the EU customs union? Surely they will want to renegotiate so that they look after and promote their own interests, rather than just accept what is on the table.”

Edwards concluded with a point about the impact of leaving the customs union on the UK’s constitutional arrangements. “International trade is a reserved matter. However, trade policy could have massive ramifications on the ability of the Welsh, Scottish and Northern Irish Governments to deliver on devolved competences. For instance, if the British Government were to allow food products of a lower standard to enter the UK, it would obviously have an impact on Welsh agricultural policy, not least our ability to export to our main European market in the customs union. If the British Government, for whatever reason, open up public services to further private interference, which has been the concern of many experts in this field, it would fundamentally undermine the ability of the devolved Governments to deliver competences within their public services for which they have responsibility.” 

Peter Grant (SNP) said he was supporting the amendments because “I do not want this motion to apply to goods going to and from the European Union or the customs union, because I want us still to be in the customs union.” “The Government should confirm today that they want to remain in the single market and the customs union, and they should signal that intention by accepting the amendments”.

Stella Creasy observed that, in her Lancaster House speech, the Prime Minister ‘said that she wanted associate membership of the customs union—a membership that does not exist’. “I have asked the Prime Minister repeatedly about the idea of associate membership, and I have asked her whether she has raised it with her European counterparts, and we have no answer… I am very struck by the fact that, 18 months on, the Government cannot even tell us whether they have asked whether the wonderful, mythical, innovative, creative, dynamic partnership they believe they can get is even on the table.”

She turned again to VAT, explaining: “Currently, businesses incurring VAT in the EU are able to claim it back through intra-country mechanisms. If they sell printers to Sweden, and they incur VAT as part of that, they can claim it back—it is relatively easy. Specifically—I am sure the Minister will want to look this up—we are talking about articles 170 and 171 of Council directive 2006/112/EC—the prime VAT directive. The detailed rules are in Council directive 2008/9/EC, and they are in our legislation… Right now, because we have the single market, businesses trading with Europe can reclaim their VAT and manage VAT relatively simply. If we leave the single market, they will have to move on to the 13th directive, which covers non-EU companies trading in the EU. The details of the 13th directive are clearly written to be advantageous to companies, saying that they can set their own VAT terms. Let us think about that for a moment. A UK car manufacturer trying to trade across Europe in radiators and the pieces and parts that make them will suddenly have to deal with VAT across 27 different countries, and 27 different pieces of paper. I am glad that the Financial Secretary is now here because he and I share a concern to remove red tape for our businesses to make sure that British businesses are not facing additional paperwork and additional complexity.”

Conclusion of the debate

The Financial Secretary, Mel Stride, wound up the debate. He reassured MPs that the Government wwould provide HMRC ‘with such funds and resources as it needs going forward’. In response to Anneliese Dodds’ concern that the Government would be able to change duties as a consequence of the Bill through secondary powers without parliamentary scrutiny, he urged her to wait until the Bill was published. In response to Kirsty Blackman’s concerns about the customs declaration service computer system, the Government has allowed just three months for testing, he said that, ‘in fact, the full system will be up and running in about August next year, and companies and traders will be migrating to it between August and January 2019’.

On Ian Murray’s amendments he said staying in the customs union was ‘a perfectly reasonable aspiration, but it overlooks the fact that we have voted to leave the European Union, and that we will therefore, of necessity, be leaving the customs union’. He said the amendments did not just close off options, they introduce “options that are deeply unattractive. If we were passed the amendments, we could find ourselves in a position whereby we unilaterally offered the same terms to European countries, but did not receive the same duty arrangements in return, which would be hugely to our disadvantage. Moreover, in the absence of a deal, if we offered those arrangements to European countries, we would find that, under the most favoured nation rules, we would have to offer the same duty arrangements to all the other countries with which we were trading, which would of course be an absurdity, and they would not necessarily have to reciprocate.”

One of Ian Murray’s amendments was voted on and was defeated by 76 votes to 311. The resolutions were then put and agreed without a vote.


The resolutions agreed were as follows

Duties of Customs (Ways and Means)

Motion made, and Question proposed, That—

(a) provision may be made imposing and regulating a duty of customs chargeable by reference to the importation of goods into the United Kingdom,
(b) provision may be made conferring power to impose and regulate a duty of customs chargeable by reference to the export of goods from the United Kingdom,
(c) other provision may be made in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the European Union, and
(d) provision may be made dealing with subordinate matters incidental to any provision within any of paragraphs (a) to (c).

Value added tax and excise duty on goods (Ways and Means) 

Motion made and Question put forthwith (Standing Order No. 51(3) —

(1) That provision may be made—
(a) amending the law relating to value added tax in connection with the withdrawal of the United Kingdom from the European Union,
(b) amending the law relating to any excise duty on goods in connection with that withdrawal, and
(c) dealing with subordinate matters incidental to any provision within paragraph (a) or (b).

(2) This Resolution does not extend to the making of any amendment relating to value added tax so as to provide—
(a) for a new description of supply or importation to qualify for a zero-rate or a reduced rate or for an exemption,
(b) for a refund of an amount of tax by reference to a particular description of supply or importation, or
(c) for a new relief applicable only in relation to a particular description of supply or importation.

Taxation (Cross-border Trade): Money

Queen's Recommendation signified.

Motion made and Question put forthwith (Standing Order No. 51(3)), That, for the purposes of any Act of the present Session which imposes a duty of customs, it is expedient—
(a) to authorise the payment out of money provided by Parliament of any expenses incurred by any public authority by virtue of the Act, and
(b) to authorise the payment into the Consolidated Fund of any fees which any public authority receives by virtue of the Act.—(Andrew Stephenson).

Question agreed to.

Taxation (Cross-border Trade) Bill

Ordered, That a Bill be brought in upon the foregoing resolutions;

Mel Stride accordingly presented a Bill to impose and regulate a duty of customs by reference to the importation of goods into the United Kingdom; to confer a power to impose and regulate a duty of customs by reference to the export of goods from the United Kingdom; to make other provision in relation to any duty of customs in connection with the withdrawal of the United Kingdom from the EU; to amend the law relating to value added tax, and the law relating to any excise duty on goods, in connection with that withdrawal; and for connected purposes.

The Bill was published the same day, and can be read, along with its explanatory notes, here. Further debate on the Bill is not scheduled to take place until the new year.

 

Posted in: Customs, Indirect Taxes
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